patrick.net

Does EW take into account the Fed? or the Buybacks?

indigenous says

Does EW take into account the Fed? or the Buybacks?

Sure. But not in the way most would think. The Fed is reactionary, not pro active, so the markets predict Fed action, not vice versa.

Those that believe the Fed's low discount rate and massive buying has been the cause of the market's bullish behavior have it backwards. Evidence of the Fed's reactionary bent will become obvious when the Fed decides to raise rates in the face of falling prices. It will confound everyone, that is, everyone but those who understand EW theory.

It seems to mean end of green [iv], and start of another rally, green [v]

darlag says

Evidence of the Fed's reactionary bent will become obvious when the Fed decides to raise rates in the face of falling prices.

Seems to me that they will do that to check inflation. The inflation will surely happen. But when they do that the debt service is going to get scary real fast.

indigenous says

The inflation will surely happen.

I'm not looking for any inflation at all. At least not until the debt bubble has been completely destroyed. That will take a couple of years at the least. In the mean time, economies will crumble under deflationary pressures caused by the paying down of debt, savings, and massive defaults on every type of asset. The resulting financial crisis will be catastrophic (but necessary).

For anyone interested, I keep showing this bubble and explaining that it HAS to collapse. What the Fed is doing is not sustainable, nor is it possible now for them to backtrack the damage that's been done to the globe through mal-investment. It's simply too late. All we are waiting on now is public recognition of the Fed's fallability.

http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-reserve-and-the-u-s-congress-have-created-a-debt-crisis-of-historic-proportion/

Most economists I read are saying inflation. As you know the only real source is increasing money supply. The reasons we have not seen it yet are the banks would rather collect a guaranteed return on excess reserve funds, corporations would rather do stock buy backs increasing their execs yield through stock value increase, others through RE. In other words historic lows in money velocity. But at some point sooner than later we will see wage inflation which we have seen in a few strikes lately. There will be/is a shortage of skilled labor.

Yea the bubble has to correct but that is down the road 10-15 years, when the entitlement burden forces the US into default. The politicians will do everything in their power to squeeze by until then.

indigenous says

Most economists I read are saying inflation.

Which is a good enough reason to take the opposite side. The herd is always wrong at the top. I'm not saying hyper-inflation won't eventua;;y happen, just that a deflationary depression must come first.

darlag says

Which is a good enough reason to take the opposite side. The herd is always wrong at the top. I'm not saying hyper-inflation won't eventua;;y happen, just that a deflationary depression must come first.

Cept the ones I read are not the mainstream mutts. I will read your article later.

Can't have hyperinflation without wage inflation.
Is current asset inflation especially RE a hyperinflation?
Won't currency wars led to hyperinflation?
Ain't Depression a consequence of hyperinflation? The other way round?

hanera says

Ain't Depression a consequence of hyperinflation?

Depression is a consequence of credit(debt) inflation. The resulting loan defaults create the deflationary depression. ALL assets are included, none are immune from the deflationary pressures, nor will any serve as a safe haven.

hanera says

Won't currency wars led to hyperinflation?

No it is only real wars that lead to hyperinflation, you will not find any examples that this is not the case.

darlag says

ALL assets are included, none are immune from the deflationary pressures, nor will any serve as a safe haven.

Cept the currency.

indigenous says

hanera says

Won't currency wars led to hyperinflation?

No it is only real wars that lead to hyperinflation, you will not find any examples that this is not the case.

Makes sense. Wars get governments broke, and start printing in desperation.

Strategist says

Makes sense. Wars get governments broke, and start printing in desperation

It might even be said that central banks make wars more/possible.

darlag says

For anyone interested, I keep showing this bubble and explaining that it HAS to collapse. What the Fed is doing is not sustainable, nor is it possible now for them to backtrack the damage that's been done to the globe through mal-investment. It's simply too late. All we are waiting on now is public recognition of the Fed's fallability.

I read your article, good work, so the question is when?

darlag says

For anyone interested, I keep showing this bubble and explaining that it HAS to collapse. What the Fed is doing is not sustainable, nor is it possible now for them to backtrack the damage that's been done to the globe through mal-investment. It's simply too late. All we are waiting on now is public recognition of the Fed's fallability.

indigenous says

I read your article, good work, so the question is when?

My Dear Friends,
There is no bubble. $4 trillion added to Money Supply is affordable to an $18 trillion economy. The stock market valuations are a result of an expected housing recovery, corporate profits, and low interest rates. For now the worst case is a stock market correction, which takes place every now and then. Not a big deal.

Strategist says

There is no bubble. $4 trillion added to Money Supply is affordable to an $18 trillion economy.

So you wouldn't mind 22% of your wealth going bye bye?

The bigger deal is that the value of the stock has not been really determined because of the government meddling.

OTOH I hear what you are saying if you get too far into the negative thinking you miss out. However the current stock valuation is NOT organic, it IS because of buy backs and excess money supply trying to find yield and other speculation or just that banks are happy to get a few basis points on excess reserve funds, because EVERYBODY knows it is a charade. So the only thing they respond to is the Yellin put.

indigenous says

Strategist says

There is no bubble. $4 trillion added to Money Supply is affordable to an $18 trillion economy.

So you wouldn't mind 22% of your wealth going bye bye?

Sure I would mind if that 22% was permanent. I would mind a lot less if I lost 22% after gaining 100%.
My point is -- corrections will come, and corrections will go, but the stock market will go on for ever. Think about it.....We have fully recovered from every single correction, crash, and depression in the history of the stock market.

Strategist says

Sure I would mind if that 22% was permanent. I would mind a lot less if I lost 22% after gaining 100%.

My point is -- corrections will come, and corrections will go, but the stock market will go on for ever. Think about it.....We have fully recovered from every single correction, crash, and depression in the history of the stock market.

I know you would think that a 18 trillion dollar economy would go on forever right?

Ceptin the Boomers will be fully retired come 2030, considering that they will take 7 times what they put into medicare that will force the government into default.

Until then though we do not have an organic economy, which is the bigger problem. The last time this sort of social experiment occurred it was in the early 30s aka the great depression that lasted for 10yr. As a comparison the great recession of 1921 had infinitely worse numbers/problems than the economy had in 1929 yet you never hear of it why? because it was over in 18 months.

And that is the problem today there is no investment going on, just speculation. The way you grow an economy is investment. Instead we have the all seeing overlords who know best meddling with something they no nothing about.

sbh says

At times you're downright rational, Strat.

:)

sbh says

At other times, not so much.

:(

indigenous says

I know you would think that a 18 trillion dollar economy would go on forever right?

Ceptin the Boomers will be fully retired come 2030, considering that they will take 7 times what they put into medicare that will force the government into default.

Until then though we do not have an organic economy, which is the bigger problem. The last time this sort of social experiment occurred it was in the early 30s aka the great depression that lasted for 10yr. As a comparison the great recession of 1921 had infinitely worse numbers/problems than the economy had in 1929 yet you never hear of it why? because it was over in 18 months.

And that is the problem today there is no investment going on, just speculation. The way you grow an economy is investment. Instead we have the all seeing overlords who know best meddling with something they no nothing about.

There is no reason why the economy shouldn't keep growing. Baby boomers retiring will be a major drain on limited resources, which is why we need to import high skilled, high wage earners to support us when we retire.

Strategist says

There is no reason why the economy shouldn't keep growing. Baby boomers retiring will be a major drain on limited resources, which is why we need to import high skilled, high wage earners to support us when we retire.

You are disagreeing with math, it is going to happen it is not my opinion. As to the other again the math makes that impossible as well.

Robert Prechter has been predicting this depression for decades. He even wrote books on it. He is still waiting and is now known as the perma-bear. IMHO, the forecasted depression has already occurred and tamed as Great Recession. There will be a pull back eventually, and pretty sure it won't drop till 1920s level. Worse case is dropped to 2009 level.

you guys should read the last Logan thread, towards the end where he talks about this.